Euro campaigners point to inward investment fall

Ernst & Young said Britain attracted only 197 internationally mobile investment projects in the six months to June, against 575 in the whole of last year.

This was the lowest half-year figure since the business services group began monitoring investment flows in 1997. Last year's full-year figure gave Britain 26 per cent of European projects, against 24 per cent in 1999 and 28 per cent in 1998.

Simon Buckby, campaign director of Britain in Europe, said the fall followed warnings from investors such as Nissan, Vauxhall and Samsung. "Foreign firms have made it clear that if we reject the euro then they would reject Britain and move elsewhere in Europe. These figures suggest that may be starting to happen."

In May, Ernst & Young forecast Britain would suffer more from a downturn in the US than the rest of Europe. Investment across Europe fell by 32 per cent against the last six months of 2000. US investment fell from 575 projects to fewer than 400.

Mark Hughes, a consultant to Ernst & Young's international location advisory service, said Britain's share of investment remained well ahead of France, its nearest competitor, which took 12 per cent of projects. But this decline "may exacerbate an existing trend in which the UK's share of European investment drifts towards its 'real' weight in Europe".

Mr Hughes warned that many of the UK's advantages, such as early liberalisation of telecoms were disappearing, while labour law was coming into line with the rest of Europe.

Invest UK, the inward investment agency, concedes that the climate is difficult but insists it is on course to maintain its share of European projects.